AARP appreciates this opportunity to present its views regarding misleading mailings targeted at seniors. The Association has had a longstanding interest in the issue from both the legislative and consumer perspectives. We remain deeply concerned that some deceptive and misleading mailings are targeted towards older persons, many of whom have modest incomes and cannot afford to waste their limited resources. Many of these mailings exploit the sensitivities and vulnerabilities of older Americans, their faith in the government, and their concern about finances.

AARP believes that all citizens should be educated about and receive adequate protection from fraudulent, deceptive and misleading mail. We commend the subcommittee for revisiting the issue. The work of this committee and others in Congress led to legislation restricting certain mailings, particularly those that used words and symbols associated with the Social Security Administration (SSA) and the Health Care Financing Administration (now called the Centers for Medicare and Medicaid Services).

Deceptive Mailings

Since legitimate businesses and organizations use mass mailings, it is essential to strike a reasonable balance between controlling fraudulent mailings and limiting the right of these organizations to conduct business. Based on our members' letters and phone calls as well as information we have received from others, we have categorized the deceptive mailings older Americans receive as follows:

• Mailings using look-alike envelopes that can mislead people into believing the sender is a government agency. They also contain documents bearing official looking symbols or words;
• Letters soliciting a fee for services that the government may provide for free or a reduced charge;
•  "Cold lead mailers" which offer seniors information about subjects, such as health or life insurance, if the individual provides personal information. The personal information is then forwarded to a marketing organization that rents the list of respondents to salespeople or agents trying to sell items;
• Solicitations that imply an affiliation with an existing organization or ones that mislead the recipient by using a name similar to another organization; and
• Misleading mailings on legislative issues, such as those promising financial settlements or action on legislation that is not receiving much congressional attention.

Mailings from groups trying to confuse elderly recipients about their Social Security and Medicare benefits by using official looking material have been reduced by the penalties and other restrictions imposed through legislation passed in 1990 and 1995. Some groups marketing questionable products, such as a gold embossed Social Security card, have been shut down by the federal and/or state governments. Yet many other companies remain in business. For example, one group promises a guide to retirement that contains the same information SSA provides free of charge. Others charge to obtain a Social Security number for a newborn although SSA provides the service free. These groups operate within the law; it is up to consumers to find out about a suspicious organization and its activities.

Cold Lead Mailers and Those with Misleading Affiliations

AARP is disturbed by the proliferation of cold lead cards and look-alike groups that prey upon unknowing older Americans. Over the years, we have learned about representatives from companies trying to coerce older Americans to buy certain products, such as living-trusts and long-term care insurance. One company consistently used AARP's name in materials designed to market living trusts. We explained to those who contacted us that living trusts are part of the complex process of estate planning and they should be alert to misrepresentations of our or any organization's name. We advised them to contact their local consumer protection agency if they were suspicious of any solicitation. Ultimately, we filed a lawsuit with the Florida Attorney General's Office against this company's misuse of our name in selling living trusts.

Other companies continue to wreak economic havoc in seniors' lives. We recently heard about an agent who claimed to be affiliated with AARP and persuaded one of our members to liquidate some holdings to buy an annuity they were promoting. She sold some mutual funds, had $55,000 in capital gains, and received a large bill from the Internal Revenue Service. The company and the agent were one of several who take advantage of the limited financial knowledge that some older people have.

We also received a copy of the attached solicitation from the National Association of Retired Persons encouraging people to pursue "their legal right as a United States Citizen to receive all the information available" to them. However, they had to complete "this request form within 5 days." After mailing in the form the respondent would receive a call from someone selling burial insurance. We have attached a sample of some of these solicitations.

Notch Mailings

For around 20 years, groups have sent misleading mailings about the so-called Social Security "notch." Some organizations went out of business, others found alternative fundraising issues, but some persist in perpetuating misinformation for financial gain. AARP has begun receiving more inquiries regarding mailings soliciting funds for notch legislation or for a notch victim registry. Yet, those born from 1917 through 1921(or 1926) are receiving the proper benefit amount. They are misled to think they get less than they deserve because their dollar benefit amount is compared to those born from 1912 through 1916. The 1912-1916 group received a windfall because of an error made in 1972. If the mistake had not been corrected in 1977, the Social Security trust funds would have faced greatly increased financial difficulty.

Numerous inquiries come from our members, or in some cases their children, in regard to these notch solicitations. For example, one member asks, "whether the Senior Citizens League is registered with the Better Business Bureau? They're asking for money… I figured the government wouldn't ask for money." Another wrote: "My wife (born in 1925) has received at least a dozen of these during the past year. Can you enlighten us? Is it a scam? They always ask for money." Unfortunately, while these letters are misleading, they are not illegal.

We respond by correcting the misinformation on the notch and encouraging them to be as informed as possible when deciding to contribute to any organization. We suggest that they request a copy of the group's financial statement before contributing. We hope that this advice will be helpful for all the mail they receive, not just solicitations targeted at older people.

AARP Educates Its Members

The Association has taken extraordinary steps to educate its members and the public at large about differentiating between legitimate offers and misleading, deceptive or fraudulent ones. Our goal is to reduce fraud and deception in mailed solicitations. Through our publications and printed materials we have alerted people to specific mailings and the need to scrutinize the solicitations they receive. In the past five years, we have launched campaigns against charity and telemarketing fraud based on research examining older victims' behavior and perceptions. We have partnered with enforcement and consumer protection agencies and warned consumers through public service announcements, educational workshops and other program activities.

We have taken a proactive stance where appropriate. In tandem with the Attorney General's office in numerous states, we gathered information and warned consumers about potential fraud. We successfully brought suit against the previously mentioned organization that attempted to confuse people by selecting a name close to ours. We have also participated in Operation Mailbox, a coordinated effort undertaken with the Federal Trade Commission (FTC) and federal and state law enforcement agencies to identify fraudulent mail. (The Operation Mailbox campaign is described in the appendix).

Conclusion

Unfortunately, some groups are willing to make money at the expense of the vulnerable and uninformed. AARP believes that today's hearing can help educate everyone regarding some of the misleading and deceptive mailings they receive. We urge Congress to determine whether additional restrictions can be placed on those who solicit funds from older Americans in a misleading or deceptive way, as well as those who try to sell them products that they do not need or want. We also urge the Social Security Administration's Inspector General to continue vigorous investigation of these groups. Of course, AARP will continue to keep our members informed, partner (where appropriate) with those who seek to expose these organizations, and educate the public about the attributes of a knowledgeable consumer.

Appendix: Flooding Older Americans Homes and Operation Mailbox

In December 1997, as part of AARP's Anti-Telemarketing Fraud campaign, we placed an article in our monthly publication, The Bulletin, that asked members to check their own mail for cards and letters that looked suspicious or that carried claims that the recipient was a "guaranteed contest winner." We also requested that readers watch for mail that offered "no risk" investments, get-rich-quick schemes, or solicitations for dubious charities, as well as mail that encouraged the recipient to immediately call a 1-800 or 1-900 number. We asked readers to submit mailings to the Association so law enforcement experts could review them for possible legal actions.

Throughout the following six months, AARP members submitted over 10,000 pieces of mail. Dozens of members sent envelopes and boxes stuffed with solicitations. Over and over our members asked the same questions: "Is this a legitimate solicitation?" and "Can you help me get the money I've won or help me get my money back?"

AARP volunteers and staff spent three months opening, reading and sorting the mail sent in by our members. In cooperation with the FTC and federal and state agencies that formed the Operation Mailbox task force, AARP identified more than 5,000 pieces of mail that might require legal action. An outside firm was hired to code the pieces under the system used in the Consumer Sentinel database. Consumer Sentinel data is used by subscribing law enforcement agencies to identify and investigate suspected fraudulent businesses or individuals.

Based in part on the 5,000 pieces of mail that AARP contributed to Operation Mailbox, and at no cost to law enforcement, the FTC/Operation Mailbox strike force announced over 150 federal and state enforcement actions against the sponsors of these mailings.

[The attachments are being retained in the Committee files.]